Correlation Between Direxion Daily and DB Base

Can any of the company-specific risk be diversified away by investing in both Direxion Daily and DB Base at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Daily and DB Base into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Direxion Daily 20 and DB Base Metals, you can compare the effects of market volatilities on Direxion Daily and DB Base and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Daily with a short position of DB Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and DB Base.

Diversification Opportunities for Direxion Daily and DB Base

0.0

Correlation Coefficient

Direxion Daily  DB Base

Pay attention - limited upside

The 3 months correlation between Direxion and BDDXF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily 20 and DB Base Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Base Metals and Direxion Daily is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Daily 20 are associated (or correlated) with DB Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Base Metals has no effect on the direction of Direxion Daily i.e., Direxion Daily and DB Base go up and down completely randomly.

Pair Corralation between Direxion Daily and DB Base

If you would invest (100.00) in DB Base Metals on December 20, 2024 and sell it today you would earn a total of  100.00  from holding DB Base Metals or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Direxion Daily 20  vs.  DB Base Metals

Direxion Daily 20

Risk-Adjusted Performance

Very Weak

Over the last 90 days Direxion Daily 20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's primary indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

DB Base Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days DB Base Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DB Base is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Direxion Daily and DB Base

The main advantage of trading using opposite Direxion Daily and DB Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, DB Base can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DB Base will offset losses from the drop in DB Base's long position.

The idea behind Direxion Daily 20 and DB Base Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.